De-dollarization Accelerates as Gold Reserves Surge

The events of July were more than just five separate developments in global finance. They are, in fact, interconnected signs of a larger shift towards de-dollarization.

The EU's largest sanctions package against Russia on July 23 led to Beijing's retaliatory measures, including export controls on European firms. On the same day, China's state banks quietly stopped allowing retail investors to trade paper gold and instead encouraged them to buy physical bars. This decision came just four days after the US Senate voted to advance a bill authorizing tariffs of up to 100% on Russian energy buyers, with China and India topping the list.

The World Gold Council reported that central banks bought a record 289 tonnes of gold in the second quarter, a 74% increase from the same period last year. This move is seen as a response to the freezing of $300 billion of Russian central bank reserves by Washington and Brussels in 2022. The lesson drawn was clear: dollar and euro reserves are conditional assets that can be seized by political decision, while gold stored domestically remains secure.

Russia and China have been building out their trade settlement systems to reduce reliance on the US dollar. They've pushed bilateral trade into rubles and yuan, expanded China's CIPS payment network as a SWIFT alternative, and are set to unveil BRICS Pay at September's summit in New Delhi. This infrastructure is being tested this week.